I'm an expert in business growth and overcoming organizational obstacles to success and a public speaker at conferences and management meetings on how to grow your organization. I'm a workshop leader for companies wanting to find their next growth engine, an author of "Create Marketplace Disruption: How to Stay Ahead of the Competition" (Financial Times Press), a contributing editor for "International Journal of Innovation Science" and a leadership columnist for CIOMagazine and ComputerWorld. I am a former head of business development for Pepsico and Dupont, consultant with The Boston Consulting Group and am currently Managing Partner for Spark Partners. Harvard MBA. Hail from Chicago.

WalMart's Mexican Bribery Scandal Will Sink It Like an Iceberg Sank the Titanic

Unlike previous Titanic films, Cameron's retelling of the disaster showed the ship breaking into two pieces before sinking entirely. The scenes were an account of the moment's most likely outcome. (Photo credit: Wikipedia)

WalMart’s been accused of bribing officials in Mexico to grow its business. But by and large, few in America seem to care. The stock fell only modestly from its highs of last week, and today the stock recovered from the drop off to the lows of February.

But WalMart is going to fail. WalMart is trying to defend and extend a horribly outdated industrial strategy.

WalMart succeeded by changing retail

Sam Walton opened his original five and dime stores in the rural countryside, and competed just like small retailers had done for decades. But quickly he recognized that industrialization offered the opportunity to shift the retail market. By applying industrial concepts like scale, automation and volume buying he could do for retailing what Ford and GM had done for auto manufacturing. And his strategy, designed for an industrial marketplace, worked extremely well. Like it or not, WalMart outperformed retailers still trying to compete like they had in the 1800s, and WalMart was spectacularly successful.

But today, the world has shifted again. Only WalMart is putting all its resources into defending and extending its industrial era strategy, rather than modifying to compete in the information age. Because its strategy doesn’t work, the company keeps wandering into spectacular failures, and horrible leadership scandals.

In 2005 WalMart’s Vice Chairman and a corporate Vice President tried to use the company’s size to wring more out of gift card and merchandise suppliers. Both were caught and fired for fraud.

In 2006 WalMart hired a new head of marketing to update the strategy, and improve the stores and merchandise. But upon realizing her recommendations violated the existing WalMart industrial strategy the company fired her after only a few months, and went public with character besmirching allegations that she and an ad agency executive were having an affair. Like that (even if true, which is hotly disputed) somehow mattered to the changes WalMart needed. Changes which were abruptly terminated upon firing her.

In 2008 a WalMart employee became an invalid in a truck accident. When the employee won a lawsuit related to the accident, WalMart sued the invalid employee to return $470,000 in insurance payments made by WalMart. As if WalMart’s future depended on the return of that money.

All of these incidents show a leadership team that is so entrenched in history it will do anything – anything – to keep from evolving forward. And that history paved a pathway where it was only a very small step to paying bribes in order to open more stores in Mexico. Such bribes could easily be seen as just “doing what it takes” to keep defending the existing business model, extending it into new markets, even though it is at the end of its money-making life.

WalMart is in a performance whirlpool, and has no functioning strategic compass

At WalMart right and wrong are no longer based on societal norms, they are based on whether or not it lets WalMart defend its existing business by doing more of what it wants to do.

WalMart’s industrial strategy is similar to the Titanic strategy. Build a boat so big it can’t sink. And if any retailer could be that big, then WalMart was it. But these scandals keep showing us that the water is increasingly full of icebergs. Each scandal points out that WalMart’s strategy is harder to navigate, and is running into big problems.

Even though the damage isn’t visible to most of us, it is clear to WalMart executives that doing more of the same is leading to less good results. WalMart is taking on water, and it has no solution. To prop up results executives keep doing things that are less and less ethical – sometimes even illegal – and providing guidance down through all levels of management and employment to do the same.

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I think New York is just angry because Walmart didn’t originate with them. Let the rich shop where they wish there and let the rest of the country shop at their local walmart. I have always wondered what these picketers do for a living? I worked 45 years, earned a college degree and invest in several venues–it’s just amazing to me how people have time to protest and “dis” everything and I can’t help but wonder who’s paying their salary?

evolution is a manmade philosophy-don’t subscribe to it–I came from a higher source, accountable to a higher source, destined for a higher plane–think on a higher plane than evolution–hum–; studied anthropology–wonder why humans didn’t evolve into two of same kind instead of two male and female of every kind–that must be a phemominal mathmetical probability–what does that have to do with marketing?–besides, behavioral psy is my forte.

I came across a few signs of change when I profiled Walmart Labs a few weeks ago…it developed Shopycat so if you sign up on Facebook it can monitor your friends’ interests and birthdays and suggest gifts for them. Walmart also realized its regular selection doesn’t offer the greatest selection of inspiring gifts, so it teamed up with other retailers for more than one million items on Walmart.com which is a vastly more interesting shopping experience than Walmart stores. Still, this is akin to rearranging the jewelry display in a boutique on the Titanic; it doesn’t address the scale of the problem but tinkers, albeit interestingly, on the edge.

Does anyone really believe there is an existing business in Mexico, no matter how large or small that has not paid bribes? From a shoeshine kid to a big box store, they all have to pay someone grease money. To pretend otherwise is at best dishonest. It is built into the system with poorly paid public servants who cannot survive on just their salary. They are expected to be inventive and supplement their meager salaries. Any indignation from the Mexican government is laughable.